retail

How Corporate Strategy May Ruin Your Holidays

Posted on by w13jeff

In a book I have recently read, Strategy is defined as positioning an organization for competitive advantage.  It involves making choices about which industries to participate in, what products and services to offer and how to allocate corporate resources. 1  As with any good strategy, there is a need for flexibility to react to a market and / or the competitors.  A corporation is constantly learning about their position and adjusting to maintain a competitive advantage.  This is never more apparent than in the retail industry today.

Black Friday has become almost a holiday in its own right.  It is the day after Thanksgiving, which is thought to be the busiest shopping day of the year and the beginning of the holiday shopping season.  There are several theories about why it’s called ‘Black Friday’, but the most common in the retail industry is due to retailers running at a loss (red) until Thanksgiving when they start taking in a profit (black).  Traditionally, retail has strictly been brick and mortar stores.  In 2005 companies started becoming a little more aggressive with their deals hitting the market place the day after Thanksgiving.  The past few years a new channel has opened competition even more where people are shopping online.

Last year we started seeing a couple different strategies with retailers offering door buster deals and opening earlier on Thanksgiving.  However, this year there is definitely more strategy involved with companies taking different approaches.  For example, Foot Locker is not discounting goods.  It is releasing a hot new shoe at the regular price and keeping their other products at regular price as well.  Target is not discounting goods but is offering a line of luxury items no other retailer is carrying.  Wal-Mart opened its stores 2 hours earlier this year and is trying to balance its promotions between the store and its online customers.  They are trying to drive more customers to Walmart.com without affecting the stores.  Lastly, Amazon is offering free shipping for any goods bought on their website.2  These are all examples of companies changing their strategy and combating their competitors.

I just read an article stating top online retailers have sales up 28.4% over last year.  Last year’s holiday online retail sales were approximately $67 billion and this year they may reach $79 billion.4  Not only is this huge growth, but it shows that retailers need to change with the times or they will find themselves out of business.  The other amazing stat is PayPal had almost a 200% volume increase in mobile payments. 4  This is telling me people are in the stores with their mobile devices and purchasing online.  Brick and mortar operations cannot survive this consumer behavior.  What does it mean to retail, as we know it?  I am not sure.  However, I am certain it is changing and companies will have to change with it.

I found these articles interesting for a couple of different reasons.  First, we are identifying a strategy as part of a project in class.  It makes you realize we need flexibility within that strategy to be successful.  What we are experiencing with our shopping habits proves this extremely vital to success and survival.  The second reason I find these articles interesting is because at work, I deal with payment methods and there is a lot of talk about mobile payments.  Some believe it is the future while others believe it is not.  There is a very interesting article below regarding PayPal discussing this very topic.  We have not made a decision at work yet, but it is good to have some options ready in the event we have to change our strategy.

References

  1. Cornelis A. de Kluyver & John A. Pearce II “Strategy: A view From the Top” Pearson Education 2012
  2. Will Retailers’ Black Friday Strategies Work?
    http://professional.wsj.com/article/SB10001424127887323622904578129544038176924.html?KEYWORDS=youtube+strategy&mg=reno64-wsj
  3. If You Want to Beat ‘Em. Learn From ‘Em First
    http://professional.wsj.com/article/SB10001424052702303734204577464503619605954.html?mod=WSJ_SmallBusiness_LEFTTopStories&mg=reno-wsj
  4. Sales soar on Cyber Monday ; Business at top retailers up 26.6%
    http://professional.wsj.com/article/TPUSAT000020121127e8br0000c.html
  5. PayPal Works to Take Its Business Offline
    http://professional.wsj.com/article/SB10001424127887324595904578117212801486972.html?KEYWORDS=paypal&mg=reno64-wsj

Black Friday shopping… minus the shopping??

Posted on by f1234csaucedo
Boats and Cargo Containers on the NJ Transit Cheesequake Creek Draw Bridge

 

There is no questioning the importance of supply chain management to a successful business.  A supply chain disruption causes production to come to a screeching halt and has negative effects on business performance and shareholder value.  When we discussed this topic in class, I could not help but think about the magnitude of issues that results from a disruption to the system.  Especially with the pressure to improve efficiency and reduce operating costs, supply chain systems are becoming increasingly more complex and involved that one major disruption could end up costing a company a significant amount of money.  Not long after discussing OM in the News examples in class of disruptions to supply chain management did we experience a devastating hurricane that not only affected the lives of those on the East Coast but also affected businesses everywhere.

Hurricane Sandy was unforgiving as she tore through the East Coast.  Articles such as Holiday Shopping Is Being Threatened By Crippled Supply Chains are surfacing everywhere speaking about the devastating consequences that came from damages to supply chains.  Retailers suffered a huge blow because of all the damages to ports and rail lines, along with destroyed warehouses full of merchandise.  The effects of Hurricane Sandy may carry over into the holiday season and affect forecasted sales for countless businesses.

Although these situations are less than desirable, they occur.  I was curious about what businesses could do to soften the blow and be more prepared for these situations.  I came across an article in the Wall Street Journal that tackled these very questions and had some insightful suggestions.  Command and Control: Managing Supply Chain Risk interviewed Kelly Marchese, a principal with Deloitte Consulting LLP who specializes is supply chain management, regarding potential threats and risks the affect the supply chain and how business can be more prepared to sufficiently handle the situation.

Kelly’s response was that companies need to make updating their technology a priority.  Too many companies are attempting to manage global supply chains with technology that dates back 5+ years.  The most important tool is to use technologies that provide simulation, visualization, and analytical capabilities.  These new technologies have different benefits such as allowing managers to simulate different improvement initiatives and their impacts before actually implementing them.  Kelly also stresses the importance of updating information management architecture to better connect all of the facilities and sites in the supply chain, especially since critical supply chain data from specific locations or regions is often overlooked since it isn’t available.  However, these technologies do come at a cost and these costs may be difficult to justify, especially in our struggling economy.

Do you think that improving technology is enough to solve a problem that has severe consequences to businesses?  Is there anything else that supply chain managers should focus on to be better prepared for these moments of crisis?

 

 

 

Taking Online Shopping Offline

Posted on by f1234erose
Online Shoppers who choose to forgo shipping chargers visit Walmart to pick up items ordered online.Link to NYTimes article “Luring Online Shoppers Offline”

Online shopping has caused retailers such as Macy’s, Best Buy, Sears and The Container Store to loose millions in sales. Consumers have had such a profound obsession with purchasing a product at the lowest price possible that almost every product sold at traditional retail stores is constantly being matched up with prices online. Currently, Best Buy is even going to the extent of customizing the bar codes on their products so they cannot be scanned by consumers so they are able to look up online prices from sites such as Amazon.

To avoid having in store sales reach an all time low, retailers are attempting to lure consumers into the store by promoting their own online operations on site. Walmart has made an effort to add Web return centers, pickup locations, free shipping outlets, payment booths, and drive-through customer service centers for online sales to appeal to the growing amount of online shoppers.

Retailers like Walmart believe that they could potentially have an advantage over their online retail competitors due to the fact that shopping offline eliminates the expensive shipping fees. Walmart gives customers a variety of options such as being able to order products from their online website and then being able to pick it up and pay for it at the store, thus appealing to customers who have a trend of preferring to pay cash for products.

From focusing on the cash option, Walmart has seen a dramatic rise in demand due to promoting online pickup at their stores, which now accounts for half their sales. As a whole, Walmart has the advantage of appealing to customers that do not have a bank account of credit cards. In addition, the in store pickup also appeals to consumers that favor to buy items in bulk that do not qualify for online purchases.

Fellow retailers of Walmart such as The Container Store and Sears have taken on site purchasing to a new level by promoting a drive-through service that allows for consumers  to get what they need on the go. This service has also seen great success because it appeals to the consumers who shop online because they do not have the time to navigate their way through the retail store to purchase the products they need. Recently, a new trend has shown that customers who used this pick up  service have caused them to visit 50% more than customers who regularly shop in the store.

The competition between traditional retailers and e-commerce companies will continue to exist, but the efforts made by the traditional retailers to keep up with online shopping have been greatly significant. With all the new bells and whistles added to their offline services, will retailers truly be able to take shopping offline for good?

Source: http://www.nytimes.com/2012/07/05/business/retailers-lure-online-shoppers-offline.html?_r=0

Cash Strap? Need a Job this Holiday Season?

Posted on by f1224hpham

With the holiday season approaching fast, many major retailers are opening up more jobs in preparation for the high demand of the holidays. Experts estimated about 700,000 new, temporary jobs for this year, which is a slight increase from last year. As the economy is slowly moving out of the recession, many American families are paying back their debts, which give them the extra cash to spend this year. Hence, there is a great outlook for this holiday season for those of you who are looking for a little more income or just taking advantage of the employee discount that most of these retailers offer for their employees.

Looking at previous years numbers, most of these retailers are retaining their seasonal workers well over the holiday season. These temporary, seasonal jobs are turned into full-time positions, which for most workers are a good thing if they are looking for a permanent job. I have started seeing a lot of companies doing this nowadays. Rather than hiring full-time workers right from the start, companies would look into their pool of temporary workers first before hiring outside workers for any new positions. I’ve had a taste of this through the internships I have had done in the past. Most of the firms that I want to work for usually hire from their pools of interns and offer little to no position to those who have not worked an internship at their firm.

We’ve talked about forecasting in class, and this article ties in with this topic. With the increase in demand for goods and services this holiday season, major retailers are hiring more workers to meet this demand. Some even go as far as to open temporary stores, i.e. Toys “R” Us, in anticipation for the busy holiday rush. I think that this is a good boost for the economy as it may opens more, new jobs in the future for some people. Also, for companies, this is a smart move because they do not have to deal with making enough revenue to cover for the fix costs that come with permanent stores throughout the year. They can just rent a store for three to four months just in time for the holiday demand.

Questions to consider: Are you looking for a job? Would you be interested in becoming a seasonal worker? How are these companies handling their forecasts? What are the pro and cons of the increase in jobs during the holiday season?

 

http://www.forbes.com/sites/meghancasserly/2012/10/02/700000-new-retail-jobs-for-holiday-2012-heres-whos-hiring/

INVENTORY TIME!

Posted on by dounyah301s12

In the past I have worked in retail for five consecutive years. I have worked for many well known companies, such as Victoria’s Secret, Hollister Co., and Wilson’s Leather to name a few. Customer service was our primary role and we were really focused on the customers. But other than that, inventory was just as important. It was the backbone of the company.  Without a sufficient amount of inventory, we would not be able to make our sales.

As an employee at Victoria’s Secret, we had a huge back room where we had our inventory stock. It was shelves and and rows full of the many items we sold. I was in charge of counting all the items we had in stock every two months. I would record the quantity and sizes of each item we had. It was torturous due to how stocked our inventory was. But in return this was great for our customers. If they didn’t find their size on the sales floor, more than likely we had it in the back room. At times we would be at fault for ordering more than what we needed, which made our stock room a bit messy. That caused for our inventoried items to be missplaced at times.

 

In contrast to having an abundant stock room, as an employee at Wilson’s Leather, I noticed over time we were not efficiently stocked. Our back room was much too small to have a large inventory of leather coats. This caused turmoil between the company and its customers. If the jacket on the sales floor was not in their size, more than likely we did not have it in the back. We would use the alternative of calling other Wilson’s Leather stores in the area and send the customer to another location. This caused us to lose many sales and new customers. It seemed as though we were more of a boutique due to the size of our store and how it could not accomadate a well stocked inventory room.

In conclusion, inventory plays a vital role in a company’s overall performance and customer service satisfaction. Inventory generates sales and allows customers to have confidence in the company, for having the item they want. At Victoria’s Secret we would get audited yearly and it allowed us to see how many total items we should have , compared to what we truly have.

 

Do you think Inventory truly affects a company’s overall performance?